South32 to Book $1.7 Billion Charge and Warns of Job Cuts
SYDNEY—South32 Ltd., the mining company spun out of BHP Billiton
Ltd. last year, said it would take around US$1.7 billion in charge
against its assets as the pain from slumping prices of commodities
including nickel and coal continues to spread.
South32 said it is also seeking to slash costs at operations
including its Cerro Matoso nickel mine and smelter in northern
Colombia and its Australian coal, alumina and manganese operations
to protect profits. However, the company stopped short of
shuttering a troubled manganese operation in South Africa
permanently in response to the global commodity price rout.
Around 620 workers will be laid off at the South African arm of
Samancor Manganese, a joint venture between South32 and Anglo
American PLC, the company said. Samancor Manganese is the world's
largest producer of manganese, largely used in the making of steel
and aluminum, and has operations in South Africa and Australia.
South32 and Anglo agreed to halt mining at the Hotazel manganese
mines in South Africa in November in response to low commodity
prices, a move that removed around 700,000 metric tons of manganese
ore from global supply.
On Thursday, South32 said mining would restart at the South
African arm of Samancor Manganese but at a substantially lower
rate. Management said the Hotazel mines would operate at around
900,000 tons below peak output for the foreseeable future.
"When combined with the restructuring initiatives that are
currently being finalized at many operations across our portfolio,
we expect to further strengthen our financial position and increase
our cash generating capacity through the cycle," Graham Kerr,
South32's Chief Executive, said.
Shares in South32 have been falling since it listed last May in
one of the largest corporate breakups in mining history. The stock
closed at 95 Australian cents (US$0.68) on Wednesday, versus its
debut value of A$2.13 a share.
Last August, the miner said it aimed to cut annual costs by
US$350 million or more by mid-2018. It also projected it would
reduce its capital expenditure this fiscal year through June by 9%
to US$700 million.
Write to David Winning at email@example.com
(END) Dow Jones Newswires
February 03, 2016 21:35 ET (02:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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